Forex: S&P 500 close does not augur well for AUD - Greg McKenna (Barcelona) - AUD/USD first broke north of 1.0420 stiff resistance on Nov 6 when the RBA held rates at 3.25%. The decision led to a wave of buying orders which were overstretched to a 6-week high at 1.0480. Then came the wild transition form risk-on to risk-off, just one day after Obama gained a second term in the Whithe House, causing players to unwind long bets as the S&P 500 tumbled over 50 points or -3.5%, with the Aussie now back to retest technical support 1.0390/1.0400.

According to Greg McKenna, Chief Executive at LightHouse Securities: "The really weak close on the S&P 500 does not augur well for the AUD bulls even though the RBA's quarterly statement on monetary policy due out this morning is likely to be a bit rhetorically aggressive in justifying why they didn't cut at this week's Board meeting. Any rally on this if equities are still weak in night trade will see traders and importers doing some selling would be my guess."

Technically, "AUD looks biased back towards a retest of 1.0350 which is the trendline you can see on the daily chart above and also and coincidently the 38.2% retracement of the recent rally. As you can see AUD has plenty of support, at least in a fibo sense, all the way down to 1.02 and indeed the recent range bottom at 1.0150 looks solid for now" Mr. McKenna adds.